Privatization, Regulation and Competition¤

It seems that privatization in South Africa is politically contentious. This is probably a common feature of most such projects around the world. (Perhaps the main exception is in some of the countries of the former Soviet empire, where an obvious distrust of the state’s exploitative power meant that privatization was politically extremely popular.) However, what is also a common experience is that, once the dust has settled, there is little support for a move back to state ownership.1 This perhaps suggests that the pain of the process can often be short-lived. In theory at least there need not be huge di¤erences between what can be achieved under carefully-managed state ownership of monopolies and under carefully-managed private ownership. For instance: